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Inequality of Opportunity in Brazil

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Author Info

  • Francois Bourguignon

    (World Bank, Washington)

  • Francisco H.B. Ferreira

    () (World Bank, Washington)

  • Marta Menéndez

    (Université Paris Dauphine)

Abstract

This paper proposes a method to decompose earnings inequality into a component due to unequal opportunities and a residual term. Drawing on the distinction between ‘circumstance’ and ‘effort’ variables in John Roemer’s work on equality of opportunity, we associate inequality of opportunities with the inequality attributable to circumstances which lie beyond the control of the individual – such as her family background, her race and the region where she was born. We interpret the decomposition as establishing a lower bound on the contribution of opportunities to earnings inequality. We further decompose the effect of opportunities into a direct effect on earnings and an indirect component which works through the “effort” variables. The decomposition is applied to the distributions of male and female earnings in Brazil, in 1996. While the residual term is large, observed circumstances nevertheless account for around a quarter of the value of the Theil index. Parental education is by far the most important circumstance affecting earnings, dwarfing the effects of race and place of birth.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 133.

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Length: 45 pages
Date of creation: 18 Nov 2005
Date of revision:
Handle: RePEc:got:iaidps:133

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Keywords: Inequality of opportunity; earnings inequality; intergenerational mobility;

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References

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  1. Jere Behrman R. & Alejandro Gavieria Uribe & Miguel Szekely Sánchez, 2001. "Intergenerational Mobility in Latin America," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 002914, FEDESARROLLO.
  2. Ferreira, Francisco H. G. & Lanjouw, Peter & Neri, Marcelo Cortes, 2002. "A Robust Poverty Profile for Brazil Using Multiple Data Sources," Economics Working Papers (Ensaios Economicos da EPGE) 444, Graduate School of Economics, Getulio Vargas Foundation (Brazil).
  3. Griliches, Zvi & Mason, William M, 1972. "Education, Income, and Ability," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S74-S103, Part II, .
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  6. Solon, Gary, 1999. "Intergenerational mobility in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 29, pages 1761-1800 Elsevier.
  7. Angus Deaton & Christina Paxson, 1993. "Intertemporal Choice and Inequality," NBER Working Papers 4328, National Bureau of Economic Research, Inc.
  8. Jere R. Behrman & Mark R. Rosenzweig, 2002. "Does Increasing Women's Schooling Raise the Schooling of the Next Generation?," American Economic Review, American Economic Association, vol. 92(1), pages 323-334, March.
  9. Casey B. Mulligan, 1999. "Galton versus the Human Capital Approach to Inheritance," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S184-S224, December.
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  11. Bowles, Samuel, 1972. "Schooling and Inequality from Generation to Generation," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages S219-S51, Part II, .
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  13. Samuel Bowles & Herbert Gintis, 2002. "The Inheritance of Inequality," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 3-30, Summer.
  14. John Roemer & Julian R. Betts, 2003. "Equalizing educational opportunity through educational finance reform," Working Papers 998, University of California, Davis, Department of Economics.
  15. Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September.
  16. Vito Peragine, 2004. "Ranking Income Distributions According to Equality of Opportunity," Journal of Economic Inequality, Springer, vol. 2(1), pages 11-30, April.
  17. Ferreira, Francisco H. G. & Paes de Barrios, Ricardo, 1999. "The slippery slope : explaining the increase in extreme poverty in urban Brazil, 1976-96," Policy Research Working Paper Series 2210, The World Bank.
  18. Hanushek, Eric A, 1986. "The Economics of Schooling: Production and Efficiency in Public Schools," Journal of Economic Literature, American Economic Association, vol. 24(3), pages 1141-77, September.
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    by Erik Figueiredo in Moral Hazard on 2010-09-24 19:31:00
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